McCarthy makes late-night concessions on debt ceiling amid GOP revolt
Ryan King
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House Speaker Kevin McCarthy (R-CA) and Republican House leadership made a series of changes to their debt ceiling proposal in a bid to win over holdouts overnight.
The Rules Committee scrapped the repeal of multiple biofuel tax credits, bumped up the timeline for enacting stricter work requirements for social safety programs, and took stronger aim at President Joe Biden’s Inflation Reduction Act. The tweaks were made in a series of late-night and early-morning amendments, including after 2 a.m.
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McCarthy privately indicated to his caucus that he wouldn’t make changes to his “Limit, Save, Grow” plan, according to multiple reports, though he refrained from ruling that out publicly. Republicans are slated to hold a conference meeting Wednesday morning to determine the bill’s future.
Seemingly lacking the votes, McCarthy appears to have caved to internal demands as GOP leadership seeks to wrangle through the legislation as early as Wednesday.
McCarthy is facing stiff opposition from Biden and the Democrats on the measure, so getting his troops on board in his wafer-thin majority is important to stave off embarrassment. He can only afford to lose four Republican members.
The biofuel tax credit adjustments were a fig leaf for Midwestern members of his caucus. McCarthy reportedly met on Tuesday with some members of the Iowa delegation who were alienated by the clawback of ethanol tax credits, given its importance to local industry.
Adjustments include stripping three biofuel tax credits rollbacks and blunting the effect of two more.
In a gesture toward Reps. Matt Gaetz (R-FL), George Santos (R-NY), and others, the tweaks feature a faster timeline for implementing the beefed-up work requirements. Gaetz, Santos, and possibly others threatened to vote “no” over disagreements with the work requirements.
Initially, the package enacted the changes in fiscal 2025, but now, they will largely go into effect by fiscal 2024. One example of the work requirements is that it would mandate able-bodied adults between 18 and 55 to work at least 20 hours a week or meet other eligibility requirements to get food stamps for more than three months out of every three years.
Changes for TANF, which were slated to kick in the fall of next year, will now go into effect this October. Rules preventing states from saving unused funding for SNAP will start in September.
To woo conservative hard-liners, the amendments also further gut the Inflation Reduction Act. This includes cuts to various spending in that law, such as $1.9 billion for shoring up transportation in neighborhoods and $5 billion in loans for green energy initiatives.
One of the most vocal Republicans to sour on the proposal was Rep. Nancy Mace (R-SC), who cited concerns about the measure’s possible adverse effects on South Carolina’s green energy industry, as well as the lack of a balanced budget over a 10-year period. The amendments largely do not appear to address those concerns.
The initial draft of the plan was estimated to slash the national deficit by $4.8 trillion over the next 10 years, according to an estimate by the Congressional Budget Office that lined up with McCarthy’s projections. It is not clear how much of an effect the changes will have on its deficit reduction.
McCarthy’s backed proposal would raise the debt ceiling over the next year either by $1.5 trillion or until March 31, 2024, whichever comes first.
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Biden and the Democrats have demanded a clean bill with no strings attached to lift the nation’s borrowing authority. McCarthy has vowed that he will not bring forward a bill to do that without spending reductions. The government rammed up against its $31.4 trillion debt limit in January.
In the time since, the Treasury has undertaken “extraordinary measures” to keep funds flowing, but that is projected to run dry sometime between June and August, per various projections. Should that happen, uninterrupted funding for various expenditures, such as the interest on the debt, would be in jeopardy.